When Apple (AAPL 0.31%) CEO Tim Cook purchased 50,000 shares of Nike (NKE 0.95%) in late December, it got a lot of attention and even sent shares of the athletic apparel and shoe company sharply higher. After all, not only is Cook a successful businessman, but he is a Nike insider. The CEO sits on Nike's board of directors.
Investors sometimes treat insider buying as a simple signal: management (or board members) think the stock is undervalued. Sometimes that's right. But investors shouldn't follow blindly.
So, is Nike stock a good buy today or not? Let's take a look.
Image source: Getty Images.
Cook's buy matters, but so does the context
Notably, Cook's purchase was an open market one. This means it wasn't part of a stock option compensation plan (or a similar plan). Rather, he had to pay full price for his shares. Additionally, the purchase was sizable, totaling nearly $3 million. It also nearly doubled his stake in the company. Given the size of the purchase and the significant increase in Cook's stake, it's not surprising that the market interpreted the purchase as good news.
Still, it's important to remember that Cook is a Nike director.
That doesn't mean the purchase is meaningless. But it does mean he may have incentives beyond pure return maximization. Directors often want to demonstrate alignment with shareholders, reinforce confidence during a rough stretch, or meet (or stay ahead of) internal ownership expectations. In other words, it can be both a sincere vote of confidence and a governance-minded move.
A rough patch
Investors should look beyond Cook's purchase to answer this simple question: Does Nike's business momentum (or lack of it) and valuation offer an attractive risk-reward right now?
Unfortunately, I don't think so.
Nike's turnaround is making progress, but the business still looks challenged.
Revenue in the company's second quarter of fiscal 2026 (a period ended on Nov. 30, 2025), rose just 1% year over year. Further, the composition of this revenue was probably even more discouraging than this anemic headline figure. Yes, wholesale revenue rose 8% year over year, but its higher-margin Nike Direct revenue fell 8%. Nike Direct is the company's direct-to-consumer channel, made up of Nike-owned stores and sales through its digital platforms. So, this channel speaks to the company's brand power with consumers, given how directly these channels are tied to its business and to consumers.
Nike's profitability also moved in the wrong direction. Gross margin fell 300 basis points to 40.6%, and net income declined 32% to $792 million.
Some of Nike's near-term problems are self-inflicted as it tries to reposition parts of its business and sharpen its product and brand message so that it can perform better over the long term. But Nike still has a lot of work to do.
"NIKE is in the middle innings of our comeback," said Nike CEO Elliott Hill in the company's latest earnings release, adding that the company is working through its "Win Now" strategic actions, including "strengthening partner relationships" and "rebalancing our portfolio..."
Meanwhile, the athleisure space remains intensely competitive, as the company faces major competition from younger brands like Lululemon, Vuori, and Hoka, as well as more established brands like Adidas. Of course, Nike's brand still has enormous global equity. But consumers have more choices than ever.
NYSE: NKE
Key Data Points
A look at valuation
I'd be more willing to recommend Nike in the middle of its turnaround and an intensely competitive environment, but shares arguably don't look cheap enough. Sure, the company's dividend yield of 2.6% is solid, and Nike has an exceptional balance sheet. But with earnings moving in the wrong direction and sales barely growing, it's tough to justify the stock's price-to-earnings ratio of 37.
Even Nike's forward price-to-earnings is high, at 40. Measuring its price as a multiple of analysts' expected earnings per share over the next year, the fact that Nike's forward price-to-earnings ratio is higher than its trailing price-to-earnings ratio shows that analysts expect earnings to remain under pressure.
Given the competitive intensity in athleisure, declining sales in its direct-to-consumer channel, margin pressure, and ongoing uncertainty as far as tariffs go, I personally will be staying on the sidelines.
Cook's buy in Nike stock is interesting. But, for me, that's about all it is.
